Announcement PDF Notice of Annual General Meeting and Explanatory Memorandum Lithium Consolidated Limited ACN 612 008 358 Date of Meeting: 28 November 2019 Time of Meeting: 3.00pm (Brisbane time) Place of Meeting: Level 7 Waterfront Place 1 Eagle Street Brisbane QLD 4000 This is an important document and requires your attention If you are in any doubt about how to deal with this document, please consult your legal, financial or other professional advisor. Lithium Consolidated Limited Page 1 Notice of Annual General Meeting Notice is given that the Annual General Meeting of Shareholders of Lithium Consolidated Limited ACN 612 008 358 (Company) will be held at Level 7 Waterfront Place 1 Eagle Street Brisbane QLD 4000 on Thursday, 28 November 2019 at 3.00pm (Brisbane time). Terms used in this Notice of Meeting are defined in Section 8 “Interpretation” of the accompanying Explanatory Memorandum. AGENDA ORDINARY BUSINESS Financial Statements To receive and consider the financial statements of the Company and its controlled entities for the period ended 30 June 2019 and the related Directors’ Report, Directors’ Declaration and Auditor’s report. Resolution 1 – Adoption of Remuneration Report (advisory Resolution) To consider and, if thought fit, pass the following Resolution as an advisory Resolution, without amendment: “That for the purposes of section 250R(2) of the Corporations Act, and for all other purposes, the Remuneration Report for the year ended 30 June 2019 (as set out on pages 20 to 25 of the Directors' Report) is adopted.” The vote on this Resolution 1 is advisory only and does not bind the Directors or the Company. Voting restriction pursuant to section 250R(4) of the Corporations Act A vote on this Resolution 1 must not be cast (in any capacity) by or on behalf of either of the following persons: (a) a member of the Key Management Personnel details of whose remuneration are included in the Remuneration Report; and (b) a Closely Related Party of such a member. However, the above persons may cast a vote on Resolution 1 if: (a) the person does so as a proxy; and (b) the vote is not cast on behalf of a member of the Key Management Personnel details of whose remuneration are included in the Remuneration Report or a Closely Related Party of such a member; and (c) either: (1) the voter is appointed as a proxy by writing that specifies the way the proxy is to vote on the Resolution; or (2) the voter is the Chairman of the Meeting and the appointment of the Chairman as proxy: A. does not specify the way the proxy is to vote on the Resolution; and B. expressly authorises the Chairman to exercise the proxy even if the Resolution is connected directly or indirectly with the remuneration of a member of the Key Management Personnel for the Company or, if the Company is part of a consolidated entity, for the entity. Lithium Consolidated Limited Page 2 Notice of Annual General Meeting Voting Intentions of the Chairman Shareholders should be aware that any undirected proxies given to the Chairman will be cast by the Chairman and counted in favour of the Resolutions the subject of this Meeting, including Resolution 1, subject to compliance with the Corporations Act. In exceptional circumstances, the Chair of the Meeting may change his/her voting intention on any Resolution, in which case an ASX announcement will be made. Further details, in relation to the ability of the Chairman to vote on undirected proxies are set out in the accompanying proxy form. Resolution 2 – Re-Election of Brian Moller as a Director of the Company To consider and, if though fit, pass the following Resolution with or without amendment, as an Ordinary Resolution: “That Mr Brian Moller, who retires by rotation in accordance with Rule 38.1 of the Company’s Constitution and ASX Listing Rule 14.4 and, being eligible, offers himself for re-election be re-elected as a Director of the Company.” Resolution 3 – Election of Andrew Haythorpe as a Director of the Company To consider and, if though fit, pass the following Resolution with or without amendment, as an Ordinary Resolution: “That, for the purposes of rule 36.2 of the Company’s Constitution and for all other purposes, Andrew Haythorpe, a Director who was appointed on 11 October 2019, retires, and being eligible, offers himself for election, is elected as a Director of the Company.” Resolution 4 – Approval of Performance Rights Plan To consider and, if thought fit, pass the following Ordinary Resolution with or without amendment: “That the Performance Rights Plan, which is summarised in the attached Explanatory Memorandum, be approved and that for the purposes of Exception 9(b) of Listing Rule 7.2 and for all other purposes, the issue of performance rights to subscribe for securities, and the issue of securities pursuant to those performance rights, within three (3) years from the date of this resolution be an exception to Listing Rules 7.1 and 7.1A.” Notes A detailed summary of the key terms of the Performance Rights Plan is set out in Schedule 1. Voting Exclusion Statement The Company will disregard any votes cast in favour of Resolution 4 by or on behalf of: (a) a Director of the Company (except one who is ineligible to participate in any employee incentive scheme in relation to the Company) and any associate of them However the Company need not disregard a vote if: (a) it is cast by a person as proxy for a person who is entitled to vote, in accordance with the directions on the proxy form; or (b) it is cast by the person chairing the Meeting as proxy for a person who is entitled to vote, in accordance with the direction on the proxy form to vote as the proxy decides. Lithium Consolidated Limited Page 3 Notice of Annual General Meeting Key Management Personnel Voting Exclusion Statement As Resolution 4 is a resolution connected directly or indirectly with the remuneration of a member of the Key Management Personnel of the Company (or, if the Company is a consolidated entity, for the entity), pursuant to section 250BD of the Corporations Act, a vote on Resolution 4 must not be cast by: (a) any member of Key Management Personnel of the Company or if the Company is part of a consolidated entity, of the entity; or (b) a Closely Related Party of such a member, who is appointed as a Shareholder’s proxy, on the basis of that appointment, where the Shareholder does not specify in writing the way the proxy is to vote on the resolution. However, the Company need not disregard a vote if it is cast by the person chairing the Meeting as proxy for a person who is entitled to vote, where the Shareholder does not specify in writing the way the proxy is to vote on the resolution, if the appointment of proxy expressly authorises the chair to exercise the proxy even if the resolution is connected directly or indirectly with the remuneration of a member of the Key Management Personnel for the Company or if the Company is part of a consolidated entity, of the entity. Voting Intentions of Chair Shareholders should be aware that any undirected proxies given to the Chair will be cast by the Chair and counted in favour of all Resolutions the subject of this Meeting, including Resolution 4, subject to compliance with the Corporations Act. In exceptional circumstances, the Chair of the meeting may change his voting intention on any resolution, in which case an ASX announcement will be made. Further details, in relation to the ability of the Chair to vote on undirected proxies are set out in the accompanying Proxy Form Resolution 5 – Approval of Employee Share and Option Plan To consider and, if thought fit, to pass, the following resolution as an Ordinary Resolution, with or without amendment: “That the Employee Share and Option Plan (ESOP), which is summarised in the attached Explanatory Memorandum, be approved and that for the purposes of Exception 9(b) of Listing Rule 7.2 and for all other purposes, the issue of securities under the ESOP within three (3) years from the date of this resolution be an exception to Listing Rules 7.1 and 7.1A.” Notes A detailed summary of the key terms of the Employee Share and Option Plan is set out in Schedule 2. Voting Exclusion Statement The Company will disregard any votes cast in favour of the Resolution 5 by or on behalf of: (a) a Director of the Company (except one who is ineligible to participate in any employee incentive scheme in relation to the Company) and any associate of them. However, the Company need not disregard a vote if: (a) it is cast by a person as proxy for a person who is entitled to vote, in accordance with the directions on the proxy form; or (b) 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. Lithium Consolidated Limited Page 4 Notice of Annual General Meeting Key Management Personnel Voting Exclusion Statement As Resolution 5 is a resolution connected directly or indirectly with the remuneration of a member of the Key Management Personnel of the Company (or, if the Company is a consolidated entity, for the entity), pursuant to section 250BD of the Corporations Act, a vote on Resolution 5 must not be cast by: (a) any member of the Key Management Personnel of the Company or if the Company is part of a consolidated entity, of the entity; or (b) a Closely Related Party of such a member, who is appointed as a Shareholder’s proxy, on the basis of that appointment, where the Shareholder does not specify in writing the way the proxy is to vote on the resolution. However, the Company need not disregard a vote if it is cast by the person chairing the Meeting as proxy for a person who is entitled to vote, where the Shareholder does not specify in writing the way the proxy is to vote on the resolution, if the appointment of proxy expressly authorises the chair to exercise the proxy even if the resolution is connected directly or indirectly with the remuneration of a member of the Key Management Personnel for the Company or if the Company is part of a consolidated entity, of the entity. Voting Intentions of Chair Shareholders should be aware that any undirected proxies given to the Chair will be cast by the Chair and counted in favour of all Resolutions the subject of this Meeting, including Resolution 5, subject to compliance with the Corporations Act. In exceptional circumstances, the Chair of the meeting may change his voting intention on any resolution, in which case an ASX announcement will be made. Further details, in relation to the ability of the Chair to vote on undirected proxies are set out in the accompanying Proxy Form. SPECIAL BUSINESS Resolution 6 – Approval to issue an additional 10% of the issued capital of the Company over a 12month period pursuant to Listing Rule 7.1A To consider and, if thought fit, pass the following Resolution, as a Special Resolution, without amendment: “That, pursuant to and in accordance with Listing Rule 7.1A, and for all other purposes, the Shareholders approve the issue of Equity Securities of up to 10% of the issued capital of the Company (at the time of issue) calculated in accordance with the formula prescribed in Listing Rule 7.1A.2, over a 12 month period from the date of the Meeting, at a price not less than that determined pursuant to Listing Rule 7.1A.3 and otherwise on the terms and conditions described in the Explanatory Memorandum (Placement Securities).” Voting Exclusion Statement The Company will disregard any votes cast in favour of Resolution 6 by or on behalf of: (a) any person who is expected to participate in, or who will obtain a material benefit as a result of, the proposed issue (except a benefit solely by reason of being a holder of ordinary securities in the Company); or (b) an associate of that person (or those persons) in (a) above. However the Company need not disregard a vote if: (a) it is cast by a person as proxy for a person who is entitled to vote, in accordance with the directions on the proxy form; or (b) it is cast by the person chairing the Meeting as proxy for a person who is entitled to vote, in accordance with the direction on the proxy form to vote as the proxy decides. Lithium Consolidated Limited Page 5 Notice of Annual General Meeting Resolution 7 – Insertion of Proportional Takeover Provisions in the Constitution To consider and, if thought fit, pass the following Resolution, as a Special Resolution, without amendment: “That, for the purposes of sections 136(2) and 648G of the Corporations Act 2001 (Cth) and for all other purposes, the Constitution of the Company be amended by re-inserting the proportional takeover provisions contained in Schedule 3 of the Explanatory Memorandum into the Constitution as Rule 75, with effect from the date of the meeting for a period of three years.” GENERAL BUSINESS To consider any other business as may be lawfully put forward in accordance with the Constitution of the Company. By order of the Board Duncan Cornish Company Secretary 21 October 2019 Lithium Consolidated Limited Page 6 Explanatory Memorandum Introduction This Explanatory Memorandum is provided to Shareholders of Lithium Consolidated Limited ACN 612 008 358 (Company) to explain the resolutions to be put to Shareholders at the Annual General Meeting to be held at Level 7 Waterfront Place 1 Eagle Street Brisbane QLD 4000 on Thursday, 28 November 2019 at 3.00pm (Brisbane time). The Directors recommend shareholders read the accompanying Notice of Meeting and this Explanatory Memorandum in full before making any decision in relation to the resolutions. Terms used in this Explanatory Memorandum are defined in Section 8 “Interpretation”. Financial Statements The Corporations Act requires that the Company’s Annual Financial Report for the period ending 30 June 2019 (including the Directors’ Report, Financial Statements and the Audit Report) be laid before the Annual General Meeting for discussion. Although not requiring a vote of members, an opportunity will be provided for members to ask questions on the Annual Financial Report. The Company will not provide a hard copy of the Company’s Annual Financial Report to Shareholders unless specifically requested to do so. The Company’s Annual Financial Report is available on its website at www.li3limited.com. 1. Resolution 1 – Adoption of Remuneration Report 1.1 Remuneration Report The Board has submitted its Remuneration Report to Shareholders for consideration and adoption by way of a non-binding advisory Resolution in accordance with section 250R of the Corporations Act. The Remuneration Report is set out on pages 20 to 25 of the Directors’ Report section of the Annual Financial Report for the period ending 30 June 2019. The Report: (a) explains the Board’s policy for determining the nature and amount of remuneration of Key Management Personnel of the Company; (b) explains the relationship between the Board’s remuneration policy and the Company’s performance; (c) sets out remuneration details for each Key Management Personnel of the Company including details of performance related remuneration and performance rights and options granted as part of remuneration; and (d) details and explains any performance conditions applicable to the remuneration of Key Management Personnel of the Company. A reasonable opportunity will be provided for discussion of the Remuneration Report at the Meeting. 1.2 Recommendation The Directors unanimously recommend that Shareholders vote in favour of adopting the Remuneration Report. A vote on this resolution is advisory only and does not bind the Directors or the Company. Lithium Consolidated Limited Page 7 Explanatory Memorandum 1.3 Voting restrictions on Key Management Personnel and their Closely Related Parties and their proxies As set out in the notes to Resolution 1, a voting restriction applies with respect to the voting on this Resolution by members of the Key Management Personnel and their Closely Related Parties and their proxies voting (in any capacity) (Voting Restriction). Key Management Personnel are those persons having authority and responsibility for planning, directing and controlling the activities of the entity, directly or indirectly, including any director (whether executive or otherwise) of that entity. The Voting Restriction does not apply where: (a) the Chairman or any other member of the Key Management Personnel is appointed in writing (by a Shareholder who is not a member of the Key Management Personnel or a Closely Related Party of the Key Management Personnel) as a proxy (Management Proxy) with specific instructions on how to vote on a resolution to adopt the remuneration report of the Company; or (b) the Chairman is appointed in writing (by a Shareholder who is not a member of the Key Management Personnel or a Closely Related Party of the Key Management Personnel) as a proxy with no specific instructions on how to vote on a non-binding Shareholder vote on remuneration, where the Shareholder provides express authorisation for the Chairman to do so. Shareholders should be aware that any undirected proxies given to the Chairman will be cast by the Chairman and counted in favour of the Resolutions the subject of this Meeting, including this Resolution 1, subject to compliance with the Corporations Act. In exceptional circumstances, the Chairman of the Meeting may change his/her voting intention on any resolution, in which case an ASX announcement will be made. 2. Resolution 2 – Re-Election of Brian Moller as a Director of the Company Mr Brian Moller retires by rotation in accordance with Rule 38.1 of the Company’s Constitution and ASX Listing Rule 14.4 and, being eligible, offers himself for re-election as a Director. Under Rule 38.1 of the Company’s Constitution, one-third of Directors are required to retire at each annual general meeting (excluding directors seeking election at the meeting for the first time, or the Managing Director). Brian Moller’s qualifications and experience Mr Moller specialises in capital markets, mergers and acquisitions and corporate restructuring, and has acted in numerous transactions and capital raisings in the industrial, resources and energy sectors. He has been a partner at the legal firm, HopgoodGanim for 30 years and leads the Corporate Advisory and Governance practice. Mr Moller acts for many publicly listed companies in Australia and regularly advises boards of directors on corporate governance and related issues. Mr Moller is a solicitor of the Supreme Court of Queensland and Solicitor and Barrister of the Supreme Court of Western Australia. Mr Moller is a Non-Executive Director of ASX listed Aguia Resources Ltd, DGR Global Ltd, Platina Resources Ltd, Dark Horse Resources Ltd (formerly Navaho Gold Limited) and chairman of ASX listed AusTin Limited and the dual TSX and AIM-listed SolGold plc. During the past three years, Mr Moller has also served as a director of the following listed companies:  DGR Global Ltd*  Aus Tin Mining Limited*  Dark Horse Resources Limited* Lithium Consolidated Limited Page 8 Explanatory Memorandum  Aguia Resources Limited (resigned 14 June 2019)  Platina Resources Ltd*  Solgold PLC*^ *denotes current directorship ^denotes listed on the Toronto Stock Exchange and the Alternative Investment Market of the London Stock Exchange Mr Moller is a member of the Audit & Risk Management Committee. In accordance with the Company’s Corporate Governance Charter that has been drafted with consideration of the ASX Corporate Governance Council’s “Corporate Governance Principles and Recommendations, 3rd Edition”, Mr Moller is not considered independent as he is a principal of Hopgood Ganim Lawyers, a material professional advisor to the Company. The Directors (with Mr Moller abstaining) recommend that you vote in favour of this ordinary resolution. 3. Resolution 3 – Election of Andrew Haythorpe as a Director Rule 36.1 of the Constitution allows the Directors to appoint at any time a person to be a Director either to fill a casual vacancy or as an addition to the existing Directors, but only where the total number of Directors does not at any time exceed the maximum number specified by the Constitution. In accordance with rule 36.2 of the Constitution, any Director so appointed holds office only until the next following annual general meeting and is then eligible for election by Shareholders but shall not be taken into account in determining the Directors who are to retire by rotation (if any) at that meeting. Andrew Haythope was appointed on 11 October 2019 and retires in accordance with clause 36.2 of the Constitution and, being eligible, seeks election from Shareholders. Andrew Haythorpe’s qualifications and experience Andrew Haythorpe has 30 years’ experience in geology, funds management and has been a Director and Chairman of a number of TSX and ASX listed companies. Since 1999, Andrew has been involved in over A$300 million of mergers and acquisitions and capital raisings in mining and technology companies listed on the TSX and ASX. Prior to 1999, he was a Fund Manager and Analyst at Bankers Trust, which grew to over A$40 billion in Funds under Management, managing the Global Energy and Resources Fund. Andrew gained his initial experience as an analyst at Suncorp (now a Top 20 ASX listed Company with some A$96 billion in assets) and following that at County Natwest and Hartley Poynton where he later became a Director. More recently he was the Managing Director of Crescent Gold and led that company from a junior explorer to a mid-tier producer within 4 years. He was also Managing Director of Michelago Resources, which became one of the top performing ASX listed companies on its transition to gold production in China. Andrew has a Bachelor of Science (Hons) from the James Cook University, is a Member of the Australian Institute of Company Directors (MAICD) and a Fellow of the Australian Minerals Institute (FAusIMM). The Directors (with Mr Haythorpe abstaining) recommend that you vote in favour of this ordinary resolution. Lithium Consolidated Limited Page 9 Explanatory Memorandum 4. Resolution 4 – Approval of Performance Rights Plan 4.1 Introduction Pursuant to Resolution 4, the Company is seeking Shareholder approval for the continued issue of securities under the Company’s Performance Rights Plan (Rights Plan) as an exception under Listing Rule 7.2, Exception 9(b) which would enable securities issued under the Rights Plan over the next three (3) years to be excluded from the calculation of the number of securities issued for the purposes of ASX Listing Rules 7.1 and 7.1A. The Company previously adopted the Rights Plan at the 2016 EGM to provide incentives to the eligible participants of the Company, including Directors of the Company who hold a salaried employment or office in the Company, and to recognise their contribution to the Company’s success. Under the Company’s current circumstances, the Directors consider that the use of Performance Rights are a cost effective and efficient incentive for the Company as opposed to relying solely on alternative forms of incentives such as cash bonuses or increased remuneration. To enable the Company to secure and retain key employees who can assist the Company in achieving its objectives, it is necessary to provide remuneration and incentives to such personnel. The Rights Plan is designed to achieve this objective by encouraging long term employment with the Company and continued improvement in performance over time and encouraging personnel to acquire and retain an interest in the Company. The Rights Plan provides for the issue of Performance Rights which, upon a determination by the Board that performance conditions attached to the Performance Rights have been met, will result in the issue of one ordinary share in the Company for each Performance Right granted. A summary of the terms of the Rights Plan are set out in Schedule 1 to this Explanatory Memorandum. 4.2 ASX Listing Rules Subject to certain exceptions, ASX Listing Rule 7.1 restricts a listed company from issuing or agreeing to issue Equity Securities in any 12-month period equivalent in number to more than 15% of its ordinary securities on issue, without the approval of its shareholders. As a result, any issue of securities by the Company to eligible employees under the Rights Plan would reduce the Company’s 15% capacity to issue Shares under Listing Rule 7.1. Exception 9 of Listing Rule 7.2 however, allows the Company to issue securities under the Performance Rights Plan without the issue of such securities being counted towards the Company’s 15% issue capacity under Listing Rule 7.1, where Shareholders have approved the issue of securities under the Performance Rights Plan as an exception to Listing Rule 7.1, within three (3) years prior to the issue of the securities. Resolution 4 is being put to Shareholders for this purpose and will allow the Company to utilise Exception 9 of Listing Rule 7.2 for three (3) years from the date of the Resolution being passed. 4.3 Information for Shareholders In accordance with Exception 9 of Listing Rule 7.2, the Company advises as follows: - since the last approval 2,000,000 Performance Rights have been issued under the Performance Rights Plan, which were issued to Mr Shanthar Pathmanathan on 5 December 2018 with approval from shareholders being given at the 2018 annual general meeting of the Company; and - a summary of the key terms of the Performance Rights Plan are set out in Schedule 1. 4.4 Further Considerations The Company believes that it will derive a significant benefit by incentivising its senior management and key employees through the issue of Performance Rights under the Rights Plan. Additionally, the Company believes it to be in the best interests of the Company to preserve the maximum commercial flexibility to issue Equity Securities that is afforded to it by ASX Listing Rule 7.1. The Directors unanimously recommend that Shareholders vote in favour of Resolution 4. Lithium Consolidated Limited Page 10 Explanatory Memorandum 5. Resolution 5 – Approval of Employee Share and Option Plan 5.1 Introduction Pursuant to Resolution 5, the Company is seeking Shareholder approval for the continued issue of securities under the Company’s Employee Share and Option Plan (the ESOP) as an exception under Listing Rule 7.2, Exception 9(b) which would enable securities issued under the ESOP over the next three (3) years to be excluded from the calculation of the number of securities issued for the purposes of ASX Listing Rules 7.1 and 7.1A. The Company previously adopted the ESOP at the 2016 EGM to utilise it as a means of rewarding and incentivising its key employees. A summary of the terms of the ESOP are set out in Schedule 2 to this Explanatory Memorandum. 5.2 ASX Listing Rules Subject to certain exceptions, Listing Rule 7.1 restricts a listed company from issuing or agreeing to issue Equity Securities in any 12-month period equivalent in number to more than 15% of the company’s ordinary securities on issue, without the approval of its shareholders. As a result, any issue of securities by the Company to eligible employees under the ESOP would reduce the Company’s 15% capacity to issue Shares under Listing Rule 7.1. Exception 9 of Listing Rule 7.2 however, allows the Company to issue securities under the ESOP without the issue of such securities being counted towards the Company’s 15% issue capacity under Listing Rule 7.1, where Shareholders have approved the issue of securities under the ESOP as an exception to Listing Rule 7.1, within three (3) years prior to the issue of the securities. Resolution 5 is being put to Shareholders for this purpose and will allow the Company to utilise Exception 9 of Listing Rule 7.2 for three (3) years from the date of the Resolution being passed. 5.3 Information for Shareholders In accordance with Exception 9 of Listing Rule 7.2, the Company advises as follows: - there have been no Options issued under the ESOP since the last approval; and - a summary of the key terms of the ESOP are set out in Schedule 2. 5.4 Further Considerations The Company believes that it will derive a significant benefit by incentivising its senior management and key employees through the issue of securities under the ESOP. Additionally, the Company believes it to be in the best interests of the Company to preserve the maximum commercial flexibility to issue Equity Securities that is afforded to it by Listing Rule 7.1. The Directors recommend that you vote in favour of this Ordinary Resolution. 6. Resolution 6 – Approval to issue an additional 10% of the issued capital of the Company over a 12-month period pursuant to Listing Rule 7.1A 6.1 Introduction Pursuant to Resolution 6, the Company is seeking Shareholder approval to issue an additional 10% of its issued capital over a 12-month period pursuant to Listing Rule 7.1A. If passed, this Resolution will allow the Company to allot and issue up to the number of new Equity Securities calculated in accordance with Listing Rule 7.1A.2 (Placement Securities) each at an issue price of at least 75% of the volume weighted average price (VWAP) for the Company’s Equity Securities in that class (calculated over the last 15 days on which trades in the Equity Securities are recorded immediately before the date on which the price at which the Placement Securities are to be issued is agreed, or if Lithium Consolidated Limited Page 11 Explanatory Memorandum the Placement Securities are not issued within five trading days of that date, the date on which the Placement Securities are issued) (Issue Price). This approval is sought pursuant to Listing Rule 7.1A. Under Listing Rule 7.1A, small and mid-cap listed entities that meet the eligibility threshold and have obtained the approva