21 June 2017
Time of General Meeting10.00am (Sydney time)
Place of General MeetingHilton Hotel
Level 2, 488 George Street
Sydney NSW 2000
ABN 74 084 669 036
Sydney Office
P +61 2 9696 2900
F +61 2 9696 2901
Level 30
175 Liverpool Street
Sydney NSW 2000
www.evolutionmining.com.au
12 May 2017
Letter to ShareholdersDear Evolution Shareholder
Enclosed is a Notice of General Meeting and Explanatory Memorandum plus a proxy form relating to a meeting of Evolution Mining Limited (Evolution) shareholders to be held on 21 June 2017.
The purpose of the meeting is to seek shareholder approvals in connection with:
an internal reorganisation within the La Mancha Group, which is Evolution's largest shareholder; and
a proposal to grant performance rights to Evolution's Executive Chairman, Mr Jacob (Jake) Klein.
Internal reorganisation within the La Mancha Group
La Mancha Group International B.V. (La Mancha) currently has a 'relevant interest' (as defined in the Corporations Act) in approximately 28.24% of Evolution's issued shares1. You may recall that La Mancha first became an Evolution shareholder when it was issued Evolution shares as consideration for Evolution's acquisition of La Mancha's Australian
operations. La Mancha has been a strong supporter of Evolution's growth strategy and has since invested additional equity on two occasions to assist with funding the transformational acquisitions of Cowal and the economic interest in Ernest Henry. La Mancha currently has two nominees on the Evolution Board, being Naguib Sawiris and Sébastien de Montessus.
The Sawiris family, which manages La Mancha, wishes to undertake a reorganisation (the Reorganisation) under which the shares in an indirect holding company of La Mancha, Marchmont Limited (Marchmont), will be transferred to Mrs.
Yousriya Loza-Sawiris, and then potentially transferred by her to one or more member(s) of the Sawiris Family Group (as such term is defined in the enclosed document). The Sawiris family has advised that the Reorganisation is for family estate and financial planning purposes, and that the transfer of the shares in Marchmont Limited to Mrs. Yousriya Loza- Sawiris, and any potential transfer by her to one or more member(s) of the Sawiris Family Group, would each be for no consideration.
While the reorganisation is internal to the La Mancha Group, because La Mancha has a relevant interest in more than 20% of Evolution Mining, and because Mrs Yousriya Loza-Sawiris (and any other Sawiris Family Group member(s) who acquire(s) the Marchmont shares from her) will be deemed to acquire a 'relevant interest' in La Mancha's Evolution shares if she/they acquire the shares in Marchmont, the reorganisation cannot proceed without approval of Evolution shareholders in general meeting under the takeover provisions of the Australian Corporations Act. La Mancha cannot vote its shares on that resolution.
This is the purpose of Resolution 1 in the enclosed Notice of General Meeting and Explanatory Memorandum.
As required by ASIC policy, Evolution has engaged an independent expert, Ernst & Young Transaction Advisory Services Limited, to provide a report on whether the disadvantages of the proposed reorganisation outweigh the
1 La Mancha is the beneficial owner of approximately 20.88% of Evolution's issued shares, and in addition has a deemed 'relevant interest' under the Corporations Act in an additional 7.36% of Evolution shares by virtue of an equity derivative collar financing arrangements which La Mancha entered into with Citigroup Global Markets Limited, as referred to in Evolution's announcement to the ASX on 24 March 2017.
advantages to Evolution shareholders other than La Mancha. The Independent Expert's Report is attached as Appendix A of the enclosed Notice of General Meeting and Explanatory Memorandum. In its report, the independent expert concludes that the disadvantages of the Proposed Reorganisation do not outweigh the advantages, the key reason being that the independent expert considers there to be no impact of the Proposed Reorganisation on Evolution shareholders other than La Mancha.
It should also be noted that La Mancha has agreed to meet Evolution's costs incurred in respect of the general meeting and the proposed transactions. These matters are explained in more detail in the enclosed Notice of General Meeting and Explanatory Memorandum.
Proposed issue of Performance Rights to Executive Chairman
Following Evolution's withdrawal of a proposal shortly prior to last year's Annual General Meeting to issue 3,750,000 retention rights to the Executive Chairman, Jacob (Jake) Klein, Evolution engaged an independent remuneration consultant to assist with structuring a revised retention scheme for Mr Klein that aligns with Evolution's remuneration philosophy and growth ambitions while mitigating concerns expressed by shareholders and proxy advisors about the absence of performance conditions attaching to the retention rights.
The Evolution Board has withdrawn the invitation to Mr Klein to be issued 3,750,000 retention rights. It is now proposed that Evolution issue to Mr Klein 3,375,000 performance rights, subject to vesting conditions and on the terms and conditions of Evolution's Employee Share Option and Performance Rights Plan (Plan). The vesting conditions would be tested on 16 December 2019 against shareholder return benchmarks and achievement of specific long term strategic objectives as determined by the Evolution Board.
Subject to the satisfaction of the vesting conditions (which include that Mr Klein remains an employee and executive director of Evolution as at 16 December 2019), Mr Klein will be entitled to exercise vested Performance Rights and, following such exercise, to be issued one Evolution Share for each vested Performance Right that is exercised. No amount will be payable by Mr Klein to receive each such Evolution Share. The number of Performance Rights which vest on the Vesting Date will depend on the extent to which the vesting conditions have been satisfied for the relevant period.
The issue of the performance rights to Mr Klein cannot be made without approval of Evolution shareholders under the ASX Listing Rules.
This is the purpose of Resolution 2 in the enclosed Notice of General Meeting and Explanatory Memorandum.
Board recommendation
For the reasons given in the enclosed Notice of General Meeting and Explanatory Memorandum, the Evolution board of directors recommends that you vote in favour of Resolution 1 (with La Mancha's nominees Naguib Sawiris and Sébastien de Montessus abstaining).
For the reasons given in the enclosed Notice of General Meeting and Explanatory Memorandum, the Evolution board of directors recommends that you vote in favour of Resolution 2 (with Jacob (Jake) Klein abstaining).
The Evolution board of directors thanks you for your continued support of Evolution.
You are strongly encouraged to read the enclosed Explanatory Memorandum in full and participate in the general meeting of Evolution to be held on 21 June 2017.
Yours sincerely
Jake Klein Executive Chairman Evolution Mining Limited | Colin Johnstone Lead Independent Director Evolution Mining Limited |
STEP ONE - Read the meeting documentation
This is an important document. You should read all of the Notice of General Meeting, Explanatory Memorandum and Proxy Form before deciding whether or not to vote in favour of any of the resolutions. If you do not understand any of the meeting documents, or are not sure what to do, please consult your legal or financial adviser immediately.
STEP TWO - Vote
If you are unable to attend the General Meeting in person, you should complete the Proxy Form and ensure that it (and any power of attorney under which it is signed) is received by Evolution's share registry at an address given below not later than 10.00am (Sydney time) on 19 June 2017. Proxy Forms received after that time will be invalid.
Online: The Proxy Form can be lodged online by visiting www.linkmarketservices.com.au. Select 'Investor Login' and enter Evolution Mining Limited in the Issuer name field, your Security Reference Number (SRN) or Holder Identification Number (HIN) (which is shown on the front of your Proxy Form), postcode and security code which is shown on the screen and click 'Login'. Select the 'Voting' tab and then follow the prompts. You will be taken to have signed your Proxy Form if you lodge it in accordance with the instructions given on the website.
By mail: Evolution Mining Limited
c/o Link Market Services Limited Locked Bag A14
SYDNEY SOUTH NSW 1235
By hand: Link Market Services Limited
1A Homebush Bay Drive Rhodes NSW 2138
By fax: (+612) 9287 0309
For details on how to complete the Proxy Form, please refer to the instructions in the Notice of General Meeting and Proxy Form.
Defined TermsCapitalised terms used in this 'Important Notices' section, Notice of General Meeting and Explanatory Memorandum are defined in section 2 of the Explanatory Memorandum.
Responsibility StatementExcept as outlined below, the information contained in the Notice of General Meeting and Explanatory Memorandum has been prepared by Evolution and is its responsibility.
La Mancha has prepared and provided all of the information in sections 1.1 to 1.5 (both inclusive) of the Explanatory Memorandum (the La Mancha Information) and is responsible for that information. None of Evolution, its directors, officers or advisers assume any responsibility for the accuracy or completeness of the La Mancha Information.
Ernst & Young Transaction Advisory Services Limited as Independent Expert has prepared the Independent Expert's Report (as set out in Appendix 1 to the Explanatory Memorandum) and takes responsibility for that report. None of Evolution, its directors, officers or advisers assume any responsibility for the accuracy or completeness of the information contained in the Independent Expert's Report, except in relation to the information which it has provided to the Independent Expert.
QuestionsIf you have any questions about any matter contained in this document, please contact Evolution's share registry, Link Market Services Limited, on +61 1300 554 474.
Key DatesDeadline for lodgement of Proxy Forms | 10.00am (Sydney time) on 19 June 2017 |
Date and time for determining eligibility to vote | 7.00pm (Sydney time) on 19 June 2017 |
Date and time of General Meeting | 10.00am (Sydney time) on 21 June 2017 |
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Evolution Mining Limited published this content on 15 May 2017 and is solely responsible for the information contained herein.
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