For Personal Use Only Use Personal for Andre Labuschagne Executive Chairman Straits Resources Limited
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+ Straits [] November 10 November 2015 Dear Shareholder EXTRAORDINARY GENERAL MEETING ‐ RESTRUCTURING As you are aware, Straits Resources Limited (Straits or Company) announced on 3 August 2015 that it had entered into Binding agreements for a breakthrough restructuring deal that secures the future of your Company. The transaction is the culmination of an exhaustive process and will result in a substantial reduction in the Company’s total debt and provide financial capacity to fund growth and build shareholder value. The transaction: reduces Standard Chartered Bank (SCB) debt by 55% to US$50 million; and provides SCB with “at risk” capital through Redeemable Convertible Preference Shares and a Price Participation Structure. On completion of the restructuring, we will also welcome an affiliate of PAG (formerly Pacific Alliance Group) as a substantial funding partner and convertible shareholder. The restructuring is subject to a variety of shareholder approvals, which are being sought at an Extraordinary General Meeting to be held at HopgoodGanim Lawyers, Level 7, Waterfront Place, 1 Eagle Street, Brisbane, Queensland on Tuesday 15 December 2015. A comprehensive notice of meeting and explanatory memorandum is attached. That document also includes an Independent Expert’s Report from BDO Corporate Finance (QLD) Ltd on the proposed transaction, which has determined that the Restructuring, including the provision of security to SCB, is fair and reasonable to Shareholders who will not participate in the Restructuring (other than via the consolidation of capital) as at the date of the Independent Expert’s Report. Your directors unanimously recommend that you vote in favour of all resolutions. Critically, all of the various resolutions are inter-conditional, so that all resolutions must be passed in order for the restructure to proceed. On behalf of the Board, I invite you to consider the Notice of Meeting and accompanying material, for this important transaction in your Company’s future. Yours faithfully For personal use only Andre Labuschagne Executive Chairman Straits Resources Limited Notice of Extraordinary General Meeting and Explanatory Memorandum Straits Resources Limited ABN 30 147 131 977 Date of Meeting: Tuesday 15 December 2015 Time of Meeting: 10.00am (Brisbane time) Place of Meeting: HopgoodGanim Lawyers Level 7, Waterfront Place 1 Eagle Street Brisbane Qld 4000 For personal use only Notice of Extraordinary General Meeting Notice is given that an Extraordinary General Meeting of Shareholders of Straits Resources Limited ABN 30 147 131 977 (Company) will be held at HopgoodGanim Lawyers, Level 7, Waterfront Place, 1 Eagle Street Brisbane, Qld 4000, on Tuesday 15 December 2015 at 10.00am (Brisbane time). Agenda Notes Resolutions 1 to 12 are conditional upon the passing of one another, so that each will not have effect unless and until all others are passed. Ordinary business 1. Resolution 1 – Consolidation of capital To consider and, if thought fit, pass the following Resolution with or without amendment, as an Ordinary Resolution: “that, pursuant to section 254H(1) of the Corporations Act, and for all other purposes, the issued capital of the Company be consolidated on the basis that every 10 Shares be consolidated into 1 Share to take effect on the Consolidation Date, and otherwise on the terms and conditions as summarised in the Explanatory Memorandum and where this consolidation results in a fraction of a Share being held by a Shareholder, the Directors be authorised to round that fraction up to the nearest whole Share.” 2. Resolution 2 – Approval to undertake Existing Lender Group Restructuring To consider and, if thought fit, pass the following Resolution with or without amendment, as an Ordinary Resolution: “that, for the purposes of section 611 item 7 of the Corporations Act and Listing Rules 7.1 and 10.1 and for all other purposes, approval be given for the Existing Lender Group Restructuring, including: (1) the Company issuing to the Existing Lender 560,463,653 CRPS and the conversion of some or all of these CRPS to Shares by one or more of the Existing Lender and the Existing Lender Permitted Acquirers; (2) the Existing Lender Group potentially increasing its Voting Power in the Company to a maximum 83.1% as a result of the conversion of the CRPS into Shares; (3) the Company granting additional security (including by varying the terms of certain existing security arrangements) in favour of the Existing Lender Group (with such security held by the Security Trustee) for the benefit of, among other such beneficiaries, the Existing Lender Group); and (4) the payment of the Copper Price Participation to the Existing Lender, For personal use only on the terms and conditions as summarised in the Explanatory Memorandum.” Notes An Independent Expert’s Report has been prepared by BDO Corporate Finance (QLD) Ltd for the purposes of shareholder approval of Resolution 2 (and Resolutions 4 and 7) under section 611 item 7 of the Corporations Act and for the purposes of shareholder approval of Resolution Page 1 of 7 Notice of Extraordinary General Meeting 2 under Listing Rule 10.1. The report is annexed as Annexure B of the Explanatory Memorandum and should be carefully considered by shareholders. The Independent Expert has concluded that the transactions under Resolutions 2, 4 and 7 are fair and reasonable to Shareholders who will not participate in the Restructuring (other than via the consolidation of capital) as at the date of the Independent Expert’s Report. 3. Resolution 3 – Variation of Credit Suisse Convertible Note Terms To consider and, if thought fit, pass the following Resolution with or without amendment, as an Ordinary Resolution: “that, for the purposes of Listing Rule 7.1, and for all other purposes, approval be given for the Company to vary the terms of the Convertible Notes on issue to Credit Suisse International to provide for the mandatory conversion of some of the Convertible Notes and the mandatory redemption of the balance of the Convertible Notes in association with completion of the Restructuring on the terms and conditions as summarised in the Explanatory Memorandum.” 4. Resolution 4 – Approval to undertake New Lender Group Restructuring To consider and, if thought fit, pass the following Resolution with or without amendment, as an Ordinary Resolution: “that, for the purposes of section 611 item 7 of the Corporations Act and Listing Rule 7.1, and for all other purposes, approval be given for the New Lender Restructuring, including: (1) the Company issuing to the New Lender 140,115,913 CNRPS and the conversion of some or all of these CNRPS to Shares by the New Lender; and (2) the New Lender Group potentially increasing its Voting Power in the Company to a maximum 50.0% as a result of the conversion of the CNRPS into Shares, on the terms and conditions as summarised in the Explanatory Memorandum.” Notes An Independent Expert’s Report has been prepared by BDO Corporate Finance (QLD) Ltd for the purposes of shareholder approval of Resolution 4 (and Resolutions 2 and 7) under section 611 item 7 of the Corporations Act. The report is annexed as Annexure B of the Explanatory Memorandum and should be carefully considered by shareholders. The Independent Expert has concluded that the transactions under Resolutions 2, 4 and 7 are fair and reasonable to Shareholders who will not participate in the Restructuring (other than via the consolidation of capital) as at the date of the Independent Expert’s Report. 5. Resolution 5 – Issue of Options to Mr Andre Labuschagne For personal use only To consider and, if thought fit, pass the following Resolution with or without amendment, as an Ordinary Resolution: “that, in accordance with ASX Listing Rule 10.11 and for the purposes of Chapter 2E of the Corporations Act and sections 200B and 200E of the Corporations Act, and for all other purposes, the Company be authorised to issue 37,364,244 Options to Mr Andre Labuschagne (or his nominees) who is a Related Party of the Company on the terms and conditions as summarised in the Explanatory Memorandum.” Page 2 of 7 Notice of Extraordinary General Meeting Notes A copy of this Notice of Meeting and the accompanying Explanatory Memorandum has been lodged with the ASIC in accordance with section 218 of the Corporations Act. 6. Resolution 6 – Issue of Options to Other KMP To consider and, if thought fit, pass the following Resolution with or without amendment, as an Ordinary Resolution: “that, for the purposes of ASX Listing Rule 7.1 and sections 200B and 200E of the Corporations Act, and for all other purposes, the Company be authorised to issue an aggregate of 56,046,365 Options to Mr Brainsbury, Mr Sheppard and Mr Miller (Other KMP) of the Company (or their nominees) on the terms and conditions as summarised in the Explanatory Memorandum.” 7. Resolution 7 – Approval for the Company to hold a Relevant Interest in its own securities in excess of 19.99% To consider and, if thought fit, pass the following Resolution with or without amendment, as an Ordinary Resolution: “that, for the purposes of section 611 item 7 of the Corporations Act, and for all other purposes, the Company be authorised to hold a Relevant Interest in its own securities potentially in excess of 19.99% (to a maximum of 24.1%), as a result of the escrow arrangements over the Shares issued upon exercise of the Management Options, on the terms and conditions as summarised in the Explanatory Memorandum.” Notes An Independent Expert’s Report has been prepared by BDO Corporate Finance (QLD) Ltd for the purposes of shareholder approval of Resolution 7 (and Resolutions 2 and 4) under section 611 item 7 of the Corporations Act and for the purposes of shareholder approval of Resolution 2 under Listing Rule 10.1.