004bb2a62876f3fbdbed30.pdf



ACN 009 066 648


NOTICE OF ANNUAL GENERAL MEETING

To be held on Monday 23 November 2015 at 10.00 am (Sydney time) at the Sheraton on the Park

161 Elizabeth Street, Sydney NSW


This is an important document. Please read it carefully.

If you are unable to attend the Annual General Meeting, please complete the Proxy Form enclosed at the back of this document and return it in accordance with the instructions.



Notice of Annual General Meeting


Notice is hereby given that the 2015 Annual General Meeting of shareholders of Lynas Corporation Limited ('Company') will be at the Sheraton on the Park at 161 Elizabeth Street, Sydney, NSW on 23 November 2015 at 10.00 am (Sydney time) for the purpose of transacting the following Business.



Ordinary Business


2015 FINANCIAL STATEMENTS

To receive and consider the financial statements of the Company for the year ended 30 June 2015, consisting of the Annual Financial Report, the Directors' Report and the Auditor's Report.


RESOLUTION 1

REMUNERATION REPORT

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

'That the Remuneration Report of the Company for the year ended 30 June 2015 be adopted.'


Pursuant to section 250R(3) of the Corporations Act 2001, the vote on this resolution is advisory only and it does not bind the directors or the Company. The Company will disregard any votes cast on this resolution by a member of the Key Management Personnel, the details of whose remuneration are included in the Remuneration Report, or a Closely Related Party of such a member unless the vote 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 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.


RESOLUTION 2

CONFIRMATION OF APPOINTMENT OF MIKE HARDING AS A DIRECTOR

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

'That the appointment of Mike Harding as a director of the Company since the previous Annual General Meeting pursuant to Article 13.5 of the Company's Constitution be confirmed.'


Mike Harding was appointed as Non-Executive Chairman of the Company with effect from 1 January 2015. Pursuant to Article 13.5 of the Company's Constitution, the existing directors of the Company may appoint a person as a director, subject to the Company confirming the appointment by resolution at the Company's next Annual General Meeting.


RESOLUTION 3

CONFIRMATION OF APPOINTMENT OF PHILIPPE ETIENNE AS A DIRECTOR

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

'That the appointment of Philippe Etienne as a director of the Company since the previous Annual General Meeting pursuant to Article 13.5 of the Company's Constitution be confirmed.'


Philippe Etienne was appointed as a Non-Executive Director of the Company with effect from 1 January 2015. Pursuant to Article 13.5 of the Company's Constitution, the existing directors of the Company may appoint a person as a director, subject to the Company confirming the appointment by resolution at the Company's next Annual General Meeting.


RESOLUTION 4

RE-ELECTION OF JAKE KLEIN AS A DIRECTOR

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

'That Jake Klein, having retired as a director of the Company pursuant to Article 13.2 of the Company's Constitution and, being eligible, having offered himself for re-election, be appointed as a director of the Company.'


Pursuant to article 13.2 of the Company's Constitution, one-third of the directors of the Company (other than the managing director), or if their number is not a multiple of 3, then such number as is appropriate to ensure that no director other than alternate directors and the managing director holds office for more than 3 years, must retire at each Annual General Meeting and, being eligible, may offer themselves for re-election.


RESOLUTION 5

SUBSEQUENT APPROVAL OF ISSUE OF ORDINARY SHARES TO THE COMPANY'S REAGENT SUPPLIER

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

'That for the purpose of Listing Rule 7.4 of ASX Limited, and for all other purposes, the issue and allotment on 20 July 2015 of 116,076,858 ordinary shares at A$0.038 per share to the supplier of two major chemical reagents for the Company's Malaysian plant is hereby approved.'


The Company will disregard any votes on this resolution by the recipient of the shares and its associates. However, the Company need not disregard a vote if 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 it is cast by the person chairing the meeting as proxy for a person who is entitled to vote, in accordance with the directions on the proxy form to vote as the proxy decides.


RESOLUTION 6

SUBSEQUENT APPROVAL OF ISSUE OF WARRANTS TO THE HOLDERS OF THE COMPANY'S CONVERTIBLE BONDS

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

'That for the purpose of Listing Rule 7.4 of ASX Limited, and for all other purposes, the issue and allotment on 7 September 2015 to the holders of the Company's convertible bonds of 174,365,466 warrants each to acquire one Ordinary Share in the Company, with an exercise price of A$0.038 and an expiry date of 30 September 2018, on the terms specified in the accompanying Explanatory Memorandum and in Annexure C, is hereby approved.'


The Company will disregard any votes on this resolution by the recipients of the warrants and their associates. However, the Company need not disregard a vote if 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 it is cast by the person chairing the meeting as proxy for a person who is entitled to vote, in accordance with the directions on the proxy form to vote as the proxy decides.


RESOLUTION 7 - GRANT OF PERFORMANCE RIGHTS FOR THE BENEFIT OF CEO & MANAGING DIRECTOR - AMANDA LACAZE

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

'That pursuant to and in accordance with section 208 of the Corporations Act 2001 (Cth) and Listing Rule 10.14 of ASX Limited, and for all other purposes, the Company approves and authorises the Directors of the Company to grant, for the benefit of Amanda Lacaze, the following rights to subscribe for ordinary shares in the Company:

  1. Performance bonus: A performance bonus of 4,464,286 Performance Rights with a 12-month vesting period commencing on 6 May 2015 and a 2 year exercise period, and subject to the conditions set out in the attached Explanatory Memorandum and otherwise in accordance with the Rules of the Rights Plan;

  2. FY15 STI: 4,971,828 Performance Rights with a 12-month vesting period commencing on 28 July 2015 and an exercise date in the first employee trading window after 28 July 2016, as a Short Term Incentive ('STI') award in respect of FY15, subject to the conditions set out in the attached Explanatory Memorandum and otherwise in accordance with the Rules of the Rights Plan;

  3. LTI: A Long Term Incentive ('LTI') of up to 19,411,764 Performance Rights with a 3 year vesting period and a 2 year exercise period, and subject to the conditions set out in the attached Explanatory Memorandum and otherwise in accordance with the Rules of the Rights Plan.'


The Company will disregard any votes cast on this resolution by a director of the Company who is eligible to participate in the employee incentive scheme in respect of which the approval is sought, and his / her associates, unless the vote 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 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.

As described in the Explanatory Memorandum, the Performance Rights were valued by the Company and its advisers as follows:


Performance bonus:

$0.0448 per Performance Right, total $200,000

FY15 STI:

$0.0383 per Performance Right, total $190,421

LTI with an NdPr Production hurdle:

$0.0391 per Performance Right, total $414,000

LTI with a Total Shareholder Return hurdle:

$0.0289 per Performance Right, total $255,000

Note: Some of the above figures include rounding adjustments. The above number of LTI Performance rights with an NdPr Production hurdle has been calculated assuming that 120% of that class of Performance Rights vests, as described in the Explanatory Memorandum.


ENTITLEMENTS TO VOTE

A Proxy Form is enclosed with this Notice.

For the purposes of determining a person's entitlement to vote at the meeting, a person will be recognised as a member and holder of shares if that person is registered as a holder of those shares at 7.00 pm on 21 November 2015.


LODGEMENT OF PROXY FORMS

For an appointment of a proxy for the meeting to be effective:

  • the proxy's appointment; and

  • the power of attorney (if any) under which it is signed or satisfactory proof of that power or a certified copy of it,

must be received by the Company at the registered office or at the office of the Company's share registry, Boardroom Pty Limited, by no later than 10.00am (Sydney time), Saturday 21 November 2015:


By hand:

Share Registry:

Boardroom Pty Limited, Level 12, 225 George Street, Sydney NSW 2000 Australia

By mail:

Share Registry:

Boardroom Pty Limited, GPO Box 3993, Sydney NSW 2001 Australia

By facsimile:

Share Registry:

+61 2 9279 0664

Online Voting:

Share Registry:

www.votingonline.com.au/lynasagm2015


Andrew Arnold

By order of the Board


Secretary

Date: 8 October 2015


Explanatory Memorandum


This Explanatory Memorandum contains information relevant to the Resolutions set out in the Notice of Annual General Meeting ('Notice') of Lynas Corporation Limited ACN 009 066 648 ('Company') and should be read carefully and in its entirety by shareholders before making any decision in relation to the Resolutions.

The Directors believe that it is in the best interests of Lynas that the Resolutions set out in the Notice be passed and, to the extent that they are permitted to make a recommendation, the Directors unanimously recommend that you vote in favour of the Resolutions. The Directors have abstained from Board discussions and from making any recommendation to shareholders in respect of those matters in which they have a personal interest.

If you have any doubt regarding the information contained in this Explanatory Memorandum or any action you should take in respect of such information, you should consult your financial, legal, taxation or other professional adviser.

Defined terms used in this Explanatory Memorandum are set out in the Glossary.


RESOLUTION 1

REMUNERATION REPORT

The Remuneration Report for the year ended 30 June 2015 is set out in the Directors' Report on pages 27 to 39 of the 2015 Annual Report.

The Remuneration Report:

  1. explains the Board's policies relating to remuneration of directors, secretaries and executives of the Company;

  2. discusses the relationship between such policies and the Company's performance;

  3. provides details of any performance conditions attached to such remuneration; and

  4. sets out remuneration details for each director and Key Management Personnel.


    The Board submits the Remuneration Report to shareholders for consideration and adoption by way of a non-binding resolution as required by the Corporations Act 2001 (Cth) ('Corporations Act').

    Shareholders should note that the vote on Resolution 1 is advisory only and, subject to the matters outlined below, will not bind the Company or the Directors. However, the Board will take the outcome of the vote into consideration when reviewing the Company's remuneration policy.

    With effect from 1 August 2011, the Corporations Act prohibits a vote on this resolution being cast (in any capacity) by or on behalf of any of the following persons:

  5. a member of the Key Management Personnel, the details of whose remuneration are included in the Remuneration Report; or

  6. a Closely Related Party of such a member.


  7. However, a person described above may cast a vote on Resolution 1 if:

    1. the person does so as a proxy appointed by writing that specifies how the proxy is to vote on the proposed resolution; and

    2. the vote is not cast on behalf of a person described in paragraphs (a) or (b) above.


    The Chair will not vote any undirected proxies in relation to Resolution 1 unless the shareholder specifically authorises the Chair to vote in accordance with the Chair's stated voting intentions. If a shareholder wishes to nominate the Chair as their proxy for the purpose of

    Resolution 1, the shareholder must either tick the 'for' or 'against' box directing the Chair how to vote, or tick the box authorising the Chair to vote in accordance with his or her stated voting intentions, on the enclosed Proxy Form for their proxy vote to be counted. Alternatively, shareholders can nominate as their proxy for the purpose of Resolution 1 a proxy who is not a member of the Company's Key Management Personnel.


    RESOLUTION 2

    CONFIRMATION OF APPOINTMENT OF MIKE HARDING AS A DIRECTOR

    In accordance with the commentary and guidance to Recommendation 2.3 of the ASX Corporate Governance Principles, the Company provides the following information concerning Mr Harding:

    Biographical details

    Mr Harding joined the Company as Non-Executive Chairman on 1 January 2015 and has significant experience with industrial businesses, having previously held management positions around the world with British Petroleum (BP), including as President and General Manager of BP Exploration Australia.

    Mr Harding is currently Chairman of Downer EDI Ltd, and a Non-Executive Director of Transpacific Limited. He is a former Chairman of Roc Oil Company Limited and a former Non-Executive Director of Santos Limited and Clough Limited.


    Details of relationships between the Candidate and the Company

    Mr Harding is the Non-Executive Chairman of the Company.


    Details of relationships between the Candidate and Directors of the Company

    Not applicable.


    Other directorships held

    Mr Harding is currently Chairman of Downer EDI Ltd, and a Non-Executive Director of Transpacific Limited.


    The term of office already served by Mr Harding

    Mr Harding joined the Company as Non-Executive Chairman on 1 January 2015.


    The Board (with Mr Harding abstaining) supports the election of Mr Harding as a director. Mr Harding is the independent Non-Executive Chairman of the Company.


    RESOLUTION 3

    CONFIRMATION OF APPOINTMENT OF PHILIPPE ETIENNE AS A DIRECTOR

    In accordance with the commentary and guidance to Recommendation 2.3 of the ASX Corporate Governance Principles, the Company provides the following information concerning Mr Etienne:

    Biographical details

    Mr Etienne joined the Company as a Non-Executive Director on 1 January 2015. He is a Non-Executive Director of Transpacific Industries Group Limited and Sedgman Limited and the former Managing Director and Chief Executive Officer of Innovia Security Pty Ltd.

    In addition, he was previously Chief Executive Officer of Orica Mining services and was a member of Orica Limited's Executive Committee. Mr Etienne's career includes senior executive positions with Orica in Australia, the USA and Germany including strategy and planning and responsibility for synergy delivery of large scale acquisitions.


    Details of relationships between the Candidate and the Company

    Mr Etienne is a Non-Executive Director of the Company.


    Details of relationships between the Candidate and Directors of the Company

    Not applicable.


    Other directorships held

    Mr Etienne is a Non-Executive Director of Transpacific Industries Group Limited and Sedgman Limited.


    The term of office already served by Mr Etienne

    Mr Etienne became a Non-Executive Director on 1 January 2015.


    The Board (with Mr Etienne abstaining) supports the election of Mr Etienne as a director and considers him to be independent.


    RESOLUTION 4

    RE-ELECTION OF JAKE KLEIN AS A DIRECTOR

    In accordance with the commentary and guidance to Recommendation 2.3 of the ASX Corporate Governance Principles, the Company provides the following information concerning Mr Klein:

    Biographical details

    Mr Klein is a Non-Executive Director of the Company and joined the Board on August 25, 2004. Mr Klein has also been Executive Chairman of Evolution Mining Limited since October 2011, a company formed following the merger of Conquest Mining Limited (of which he was Executive Chairman from May 2010 until the merger) and Catalpa Resources Limited. Prior to that, Mr Klein was President and Chief Executive Officer of Sino Gold Mining Limited, where he managed the development of that company into the largest foreign participant in the Chinese Gold Industry. Sino Gold Mining Limited was listed on the ASX in 2002 with a market capitalisation ofA$100 million and was purchased by Eldorado Gold Corporation in late 2009 for over A$2 billion. Sino Gold Mining Limited was an ASX 100 company, operating two award-winning gold mines and engaging over 2,000 employees and contractors in China. Mr Klein resigned as a Director of Sino Gold Mining Limited in December 2009. Mr Klein was also a Non-Executive Director of OceanaGold Corporation between December 2009 and July 2014.

    Prior to joining Sino Gold Mining Limited in 1995, Mr Klein was employed at Macquarie Bank and PricewaterhouseCoopers. Mr Klein is a past president of the NSW Branch of the Australia China Business Council and previously served on the NSW Asia Business Council.


    Details of relationships between the Candidate and the Company

    Mr Klein is a Non-Executive Director of the Company.


    Details of relationships between the Candidate and Directors of the Company

    Not applicable.


    Other directorships held

    Mr Klein is Executive Chairman of Evolution Mining Limited.


    The term of office already served by Mr Klein

    Mr Klein joined the Board as a Non-Executive Director on 25 August 2004.


    The Board (with Mr Klein abstaining) supports the re-election of Mr Klein as a director and considers him to be independent.


    RESOLUTION 5

    SUBSEQUENT APPROVAL OF ISSUE OF ORDINARY SHARES TO THE COMPANY'S REAGENT SUPPLIER

    1. Background to Resolution 5

      In consideration for the supplier of two major chemical reagents for the Lynas Advanced Materials Plant (LAMP) agreeing to settle a 'take or pay' amount of approximately RM 12.4 million (approximately A$4.41 million), as detailed in Annexure A, the Company issued 116,076,858 Ordinary Shares to the supplier on the morning of Monday 20 July 2015, at the closing price of the Company's shares on the ASX on Friday 17 July 2015 (being A$0.038 per share). The supplier also agreed to reduce the 'take or pay' volumes to Lynas' current and expected future volumes of consumption.

      The supplier is a Malaysian company that supplies chemical reagents to the LAMP. The supplier did not hold any other Lynas shares when the supplier acquired the shares referred to in this Resolution. At all times, the supplier's shareholding in Lynas has been less than 5%.

      ASX Listing Rule 7.1 requires approval of the holders of ordinary securities of a listed company for an issue by an entity of equity securities if, over a 12 month period, the number of the equity securities issued is more than 15% of the number of ordinary securities on issue at the start of that 12 month period (subject to certain exceptions set out in Listing Rule 7.2).

      Listing Rule 7.4 provides that an issue of securities made without approval under Listing Rule 7.1 is treated as having been made with approval for the purpose of Listing Rule 7.1 if the issue did not breach Listing Rule 7.1 and shareholders subsequently approve the issue.

      Approval is sought for the issue and allotment of 116,076,858 Ordinary Shares to the supplier of two major chemical reagents for the LAMP. The shares were issued on the morning of Monday 20 July 2015, at the closing price of the Company's shares on the ASX on Friday 17 July 2015 (being A$0.038 per share). Resolution 5 is being put to shareholders to enable Lynas to have the capacity to issue up to 15% of its issued ordinary securities over the next 12 months.

      Additional information concerning the issuance of the shares was contained in the Company's ASX announcement dated 17 July 2015, a copy of which is attached as Annexure A.


      The recipient of the shares was not a 'related party' of the Company under the Corporations Act.

      For the purposes of Listing Rule 7.5:

    2. the number of Ordinary Shares that Lynas issued and allotted was 116,076,858;

    3. the price for the Ordinary Shares was A$0.038 per Ordinary Share, being the closing price of the Company's shares on the ASX on Friday 17 July 2015;

    4. the Ordinary Shares were issued on the same terms as, and rank equally with, all other existing Lynas Ordinary Shares, from the time of issue;

    5. the allottee is the supplier of two major chemical reagents for the LAMP. Further details are set out in Annexure A; and

    6. the net proceeds were applied in settlement of a 'take or pay' amount of approximately RM 12.4 million (approximately A$4.41 million), as detailed in Annexure A.


    7. What will happen if Resolution 5 is passed

    1. Advantages

      If shareholders approve Resolution 5, Lynas will refresh its placement capacity. Although the Directors do not currently propose to issue further equity in the immediate future other than as set out in this Explanatory Memorandum, such a resolution provides funding flexibility in respect of potential acquisitions, investment opportunities, and general capital management initiatives that may arise.


    2. Disadvantages/Risks

    If the Company issues further equity, the percentage holdings in Lynas of shareholders who do not participate will be further diluted.

    The Board of Lynas is of the opinion that these potential disadvantages and risks are substantially outweighed by the potential advantages and benefits associated with the Company refreshing its placement capacity, and accordingly considers that Resolution 5 is in the best interests of shareholders.

    However, shareholders should consider their individual circumstances and make their own determination as to how to vote on Resolution 5.


    1. What will happen if Resolution 5 is not passed

      If shareholders do not approve Resolution 5:

    2. if an opportunity of the type described in section 5.2.1 does arise, a Shareholder vote which does not approve Resolution 5 would constrain Lynas' ability to participate in that opportunity in a timely manner, or at all;

    3. the Company will be restricted in raising further capital through a placement without shareholder approval; and

    4. alternative funding sources may not be available.


    RESOLUTION 6

    SUBSEQUENT APPROVAL OF ISSUE OF WARRANTS TO THE HOLDERS OF THE COMPANY'S CONVERTIBLE BONDS

    1. Background to Resolution 6

      In consideration for the holders of the Company's convertible bonds agreeing to the extension of the convertible bond facility to 30 September 2018 and the related amendments that were summarized in the Company's ASX announcement dated 17 August 2015, a copy of which is set out in Annexure B, the Company issued 174,365,466 warrants to the holders of the convertible bonds on 7 September 2015.

      Each Warrant is an option to acquire one Ordinary Share in the Company at any time up to 30 September 2018 at an exercise price of A$0.038, and otherwise on the terms set out in Annexure C.

      The Warrants were issued to the Company's convertible bond holders in proportion to their holdings of convertible bonds. The majority holder of the convertible bonds and the majority holder of the Warrants is the Mt Kellett group. If all of the Warrants are exercised, the aggregate number of new shares that would be issued upon exercise would be less than 5% of the issued shares in Lynas.

      If any of the Warrants are exercised, the effect would be to dilute the shareholding of existing shareholders. The market price of the Ordinary Shares during the term of the Warrants will normally determine whether or not the Warrants are exercised. The highest closing price for Shares trading on ASX during the past 12 months was A$0.095 which occurred on 29 September 2014 and the lowest closing price of Shares trading on ASX during the past 12 months was A$0.030 which occurred on 25 June 2015. The most recent closing price of Shares trading on the ASX prior to the date of this Explanatory Memorandum was A$0.033 which occurred on 1 October 2015.

      ASX Listing Rule 7.1 requires approval of the holders of ordinary securities of a listed company for an issue by an entity of equity securities if, over a 12 month period, the number of the equity securities issued is more than 15% of the number of ordinary securities on issue at the start of that 12 month period (subject to certain exceptions set out in Listing Rule 7.2).

      Listing Rule 7.4 provides that an issue of securities made without approval under Listing Rule 7.1 is treated as having been made with approval for the purpose of Listing Rule 7.1 if the issue did not breach Listing Rule 7.1 and shareholders subsequently approve the issue.


      Approval is sought for the issue and allotment on 7 September 2015 of 174,365,466 Warrants, each to acquire one Ordinary Share in the Company, to the holders of the Company's convertible bonds. The Warrants have an exercise price of A$0.038 and an expiry date of 30 September 2018, and are otherwise on the terms set out in Annexure C. Resolution 6 is being put to shareholders to enable Lynas to have the capacity to issue up to 15% of its issued ordinary securities over the next 12 months.

      None of the recipients of the Warrants were 'related parties' of the Company under the Corporations Act. For the purposes of Listing Rule 7.5:

    2. the number of Warrants that Lynas issued and allotted was 174,365,466;

    3. details of the amendments to the terms of the Company's convertible bonds that were agreed in consideration for the issuance of the Warrants are set out in the Company's ASX announcement dated 17 August 2015, a copy of which is set out in Annexure B. There was no additional consideration paid for the issuance of the Warrants.

    4. the exercise price of the Warrants is A$0.038 per Warrant;

    5. the expiry date of the Warrants is 30 September 2018. The terms of the Warrants are set out in Annexure C;

    6. the allottees were the holders of the Company's convertible bonds; and

    7. as noted above, there were no additional proceeds from the issuance of the Warrants. If all of the Warrants are exercised, the Company will receive up to A$6.625 million.


    8. What will happen if Resolution 6 is passed

    1. Advantages

      If shareholders approve Resolution 6, Lynas will refresh its placement capacity. Although the Directors do not currently propose to issue further equity in the immediate future other than as set out in this Explanatory Memorandum, such a resolution provides funding flexibility in respect of potential acquisitions, investment opportunities, and general capital management initiatives that may arise.


    2. Disadvantages/Risks

    If the Company issues further equity, the percentage holdings in Lynas of shareholders who do not participate will be further diluted.

    The Board of Lynas is of the opinion that these potential disadvantages and risks are substantially outweighed by the potential advantages and benefits associated with the Company refreshing its placement capacity, and accordingly considers that Resolution 6 is in the best interests of shareholders.

    However, shareholders should consider their individual circumstances and make their own determination as to how to vote on Resolution 6.


    1. What will happen if Resolution 6 is not passed

      If shareholders do not approve Resolution 6:

    2. if an opportunity of the type described in section 6.2.1 does arise, a Shareholder vote which does not approve Resolution 6 would constrain Lynas' ability to participate in that opportunity in a timely manner, or at all;

    3. the Company will be restricted in raising further capital through a placement without shareholder approval; and

    4. alternative funding sources may not be available.


    RESOLUTION 7

    GRANT OF PERFORMANCE RIGHTS FOR THE BENEFIT OF CEO

    & MANAGING DIRECTOR - AMANDA LACAZE

    Summary

    In accordance with the terms of Amanda Lacaze's employment contract (details of which were announced to the ASX on 25 June 2014), the Company proposes to grant up to the following number of Performance Rights for the benefit of its Chief Executive Officer and Executive Director, Amanda Lacaze:

    1. Performance bonus: A performance bonus of 4,464,286 Performance Rights (value A$200,000) with a 12-month vesting period commencing 6 May 2015 and a 2 year exercise period, and otherwise in accordance with the Rules of the Rights Plan ('Performance Bonus Performance Rights');

    2. FY15 STI: 4,971,828 Performance Rights (value A$190,421) with a 12-month vesting period commencing 28 July 2015 and an exercise date in the first employee trading window after 28 July 2016, as an STI award in respect of FY15, subject to the conditions set out in the attached Explanatory Memorandum and otherwise in accordance with the Rules of the Rights Plan ('FY15 STI Performance Rights');

    3. LTI: A Long Term Incentive ('LTI') of up to19,411,764 Performance Rights (value A$669,000) with a 3 year vesting period commencing 18 September 2015 and a 2 year exercise period, and otherwise in accordance with the Rules of the Rights Plan ('LTI Performance Rights'). This figure includes the potential award of 120% of the LTI Performance Rights that are subject to an NdPr production condition, as described below.


    Each Performance Right is a right to acquire one share in the Company ('Share') in the future, subject to certain conditions. Unlike an Option, the holder of a Performance Right is not required to pay an exercise price in order to exercise his/her right to acquire Shares. The Performance Rights would be held via the Lynas Corporation Limited Employee Share Trust, the details of which are set out in Annexure E.

    The Company believes that it is appropriate to grant Performance Rights, and not Options, to Ms Lacaze this year. Over the past few years, the Lynas share price has closely tracked global Rare Earths prices, and the volatility of global Rare Earths prices would make it difficult to strike an appropriate exercise price for Options in the current market environment. Ms Lacaze is a highly credentialed director who brings more than 25 years of senior operational experience to Lynas, including management of both publicly listed and private companies. It is appropriate that her remuneration package is benchmarked to the market and that her remuneration package includes incentives for long term performance that aligns with the interests of shareholders.

    An external consulting firm, Mercer, provided data on Total Remuneration based on company peer groups to assist the Company to benchmark the remuneration package of the previous CEO. The remuneration package of Ms Lacaze was announced to the ASX on 25 June 2014, with a base salary 30% less than the base salary of the previous CEO and a Total Remuneration equivalent to the Total Remuneration of the previous CEO (i.e. Ms Lacaze has more remuneration at risk). This data was also used by the Company's Nomination and Remuneration Committee to calculate a recommended number of Performance Rights to be granted to achieve remuneration in line with the Company's remuneration policy based on peer group comparisons.


    Listing Rule 10.14

    Listing Rule 10.14 states that a company must not permit a Director or an associate of a Director to acquire securities under an employee incentive scheme without the approval of ordinary shareholders.

    The following information is provided to shareholders for the purpose of Listing Rule 10.15:

    1. The Performance Rights will be issued to the trustee of the Lynas Corporation Limited Employee Share Trust (the 'EST Trustee'). The EST Trustee will hold the Performance Rights for the benefit of Amanda Lacaze, who is an Executive Director, as described in Annexure E.

    2. The maximum number of Performance Rights to be granted under Resolution 7 is as follows:

    3. Performance bonus: 4,464,286 Performance Rights (value A$200,000).

    4. FY15 STI: 4,971,828 Performance Rights (value A$190,421).

    5. LTI: 19,411,764 Performance Rights (value A$669,000) - This figure includes the potential award of 120% of the LTI Performance Rights that are subject to an NdPr production condition, as described below.

    6. The Performance Rights will be granted as employee incentives and accordingly, except as described in Annexure E, the Performance Rights will be issued for no additional cash consideration. No amount will be payable on the exercise of the Performance Rights. The Performance Bonus Performance Rights will have a 12 month vesting period commencing 6 May 2015, and a 2 year exercise period. The FY15 STI Performance Rights will have a 12 month vesting period commencing 28 July 2015, and an exercise date in the first employee share trading window after 28 July 2016. The LTI Performance Rights will have a 3 year vesting period commencing

      18 September 2015 and a 2 year exercise period.

    7. The Performance Rights are subject to the following vesting conditions and performance hurdles:

    8. Performance bonus: The Performance Bonus Performance Rights have a 12-month vesting period commencing on 6 May 2015. They were awarded to Ms Lacaze, subject to shareholder approval, and conditional on satisfaction of performance hurdles relating to positive operating cash flow for at least 2 consecutive months and comprehensive plans being in place to manage residues at both the LAMP and Mt Weld. At the Lynas Board meeting on 6 May 2015, the Board concluded that both of the above performance hurdles had been satisfied. Accordingly, the Performance Bonus Performance Rights are now being put to shareholders for approval.

    9. FY15 STI: The FY15 STI Performance Rights have a 12-month vesting period commencing on 28 July 2015. They were awarded to Ms Lacaze, subject to shareholder approval, as an STI award in recognition of recent achievements and as part of Lynas' retention policies. In approving the proposed award, the Board took into account Ms Lacaze's contribution to the following key performance areas:

    10. Improved production rates

    11. Decreased costs

    12. Improved cash management, and achievement of positive cash flow performance

    13. Rescheduling of the debt facilities to provide 3 years of runway.

    14. LTI: The LTI Performance Rights will have a 3-year vesting period. The LTI Performance Rights are subject to the following performance hurdles:

    15. 50% will be conditional on the Company's cumulative NdPr production from 1 July 2015 to 31 December 2017, in accordance with the following sliding scale:

    16. If cumulative NdPr production from 1 July 2015 to 31 December 2017 is at least 10,440 tonnes, then 50% of the NdPr production portion will vest.

    17. If cumulative NdPr production from 1 July 2015 to 31 December 2017 is at least 11,391 tonnes, then 100% of the NdPr production portion will vest.


    18. If cumulative NdPr production from 1 July 2015 to 31 December 2017 is at least 12,530 tonnes, then 120% of the NdPr production portion will vest.

    19. 50% will be conditional on the company's Total Shareholder Return (TSR) being at least at the 51st percentile of ASX 200 companies calculated over the 3-year vesting period, in accordance with the following sliding scale:

    20. If the Lynas TSR is at least at the 51st percentile, 50% of the TSR portion will vest.

    21. If the Lynas TSR is at least at the 76th percentile, 100% of the TSR portion will vest.

    22. If the Lynas TSR is between the 51st percentile and the 76th percentile, a pro rata amount of between 50% and 100% of the TSR portion will vest (with the relevant percentile being rounded up or down to the nearest 5%, for ease of calculation).

      The Directors believe that the above performance hurdles are the most important measures of long-term success for the Group. The NdPr Production hurdle in paragraph (d)(iii)(A) above defines long-term success in the context of production of the Group's most valuable product achieving at least the production targets set out in the Group's senior debt facility. As announced to the ASX on 17 August 2015, if the Group achieves those NdPr production targets, then the Group has the potential to reduce the interest rate payable on the senior debt facility in accordance with the table below:


      Cumulative NdPr Production from 1 July 2015

      Interest reduction

      Interest penalty

      31 December 2015

      1860 tonnes

      0.5%

      0.25%

      30 June 2016

      3840 tonnes

      0.5%

      Nil

      31 December 2016

      5940 tonnes

      0.5%

      0.25%

      30 June 2017

      8040 tonnes

      0.25%

      0.25%

      31 December 2017

      10440 tonnes

      0.25%

      0.25%


      The TSR hurdle is directly aligned with shareholder returns. The TSR hurdle compares shareholder returns from Lynas to shareholder returns from ASX 200 companies over the 3-year vesting period.

    23. The Performance Rights were valued by the Company and its advisers (KPMG) as follows:

    24. Performance bonus: The Performance Bonus Performance Rights were valued by the Company and its advisers (KPMG) atA$0.0448 per Performance Right. Details of the calculation of those valuations are set out below.

    25. FY15 STI: The FY15 STI Performance Rights were valued by the Company and its advisers (KPMG) at A$0.0383 per Performance Right. Details of the calculation of those valuations are set out below.

    26. LTI: Those LTI Performance Rights with an NdPr Production hurdle were valued by the Company and its advisers (KPMG) at A$0.0391 per LTI Performance Right. Those LTI Performance Rights with a Total Shareholder Return (TSR) hurdle were valued by the Company and its advisers (KPMG) at A$0.0289 per LTI Performance Right. Details of the calculation of those valuations are set out below.

    27. Details of the securities granted under the Company's Employee Options and Performance Rights Plans to persons referred to in Listing Rule 10.14 since the issuance of securities pursuant to the Company's Employee Options Performance Rights Plans was approved by shareholders at the AGM on 28 November 2014 are set out below.

      The following Performance Rights were granted for the benefit of Amanda Lacaze, as approved by shareholders at the Annual General Meeting held on 28 November 2014:

    28. Sign-on bonus: A sign-on bonus of 862,069 Performance Rights with a 12-month vesting period (and no other vesting conditions) and a 2 year exercise period, and subject to the Rules of the Rights Plan;

    29. Performance bonus: A performance bonus of 1,086,957 Performance Rights with a 12-month vesting period and a 2 year exercise period, and subject to the Rules of the Rights Plan;

    30. LTI: A Long Term Incentive ('LTI') of up to 6,226,416 Performance Rights with a 3 year vesting period and a 2 year exercise period, and subject to the Rules of the Rights Plan.

    31. Each of the above Performance Rights were granted as employee incentives and accordingly, except as described in Annexure E, the Performance Rights were granted for no additional cash consideration.

    32. The names of all persons referred to in Listing Rule 10.14 who are entitled to participate in the Plan are: Amanda Lacaze.

    33. No loan is granted by the Company for the acquisition of the Performance Rights. As described in Annexure E, the EST Trustee will provide a loan to Amanda Lacaze equivalent to the value of the Performance Rights to enable Amanda Lacaze to subscribe for Share Units in the EST. The Share Units in the EST will be issued for a consideration equal to the value of the Performance Rights to be issued for the benefit of Amanda Lacaze.

    34. The Performance Rights will be issued no later than 12 months after the date of this Annual General meeting.

    35. The Performance Rights will be issued to the EST Trustee for the benefit of Amanda Lacaze for no additional cash consideration, except as set out in Annexure E.


    36. Related Party Transactions

      Chapter 2E of the Corporations Act prohibits a public company from giving a financial benefit to a related party of the public company unless either:

      1. the giving of the financial benefit falls within one of the nominated exceptions to the provision; or

      2. prior shareholder approval is obtained to the giving of the financial benefit.


      For the purposes of Chapter 2E, each Director of the Company is considered to be related parties of the Company.

      Resolution 7 provides for the grant of Performance Rights for the benefit of a Director of the Company, which is a financial benefit that requires shareholder approval. For the purpose of Chapter 2E of the Corporations Act the following information is provided.


      The related parties to whom the proposed resolutions would permit the financial benefit to be given

      Amanda Lacaze


      The nature of the financial benefit

      The proposed financial benefit to be given is the grant of Performance Rights. The Performance Rights will be granted as employee incentives and accordingly, except as described in Annexure E, the Performance Rights will be issued for no additional cash consideration. The terms and conditions of the Performance Rights to be granted are set out in Annexure D to this Explanatory Memorandum. The Performance Rights cannot be sold, transferred, assigned or otherwise disposed of before the Performance Rights have vested.


      Directors' recommendation and interests

      All the Directors were available to consider the proposed Resolution 7.

      Section 195 of the Corporations Act provides, in essence, that a Director of a public company may not vote or be present during meetings of Directors when matters in which that Director holds a 'material personal interest' are being considered.

      Amanda Lacaze has an interest in the outcome of the proposed resolution because she will be granted an interest in Performance Rights in accordance with the proposed resolution. Accordingly, Amanda Lacaze is unable to make a recommendation to shareholders concerning the proposed Resolution 7.

      The other Directors of the Company (Non Participating Directors) do not have an interest in the outcome of the proposed resolution and consider themselves justified in making a recommendation to shareholders concerning the proposed Resolution 7. Each of the Non

      Participating Directors considers that the proposed Resolution 7 is in the best interests of the Company and its shareholders. It is important that the remuneration of the Directors is linked to the medium term and long term strategies of the Company. Proposed Resolution 7 will provide Amanda Lacaze with additional incentives to successfully implement the Company's strategies.

      Therefore, each Non Participating Director recommends that shareholders vote in favour of Resolution 7.


      Other information that is reasonably required by members to make a decision and that is known to the Company or any of its Directors

      The proposed Resolution 7 would have the effect of giving power to the Directors to grant Amanda Lacaze Performance Rights on the terms and conditions as set out in Annexure D and as otherwise mentioned above. The Company presently has on issue 3,488,438,369 ordinary shares. If the proposed Performance Rights to be granted for the benefit of Amanda Lacaze are approved by shareholders, the total number of Options and Performance Rights granted by the Company will be 97,647,532. This represents approximately 2.8% of the 3,488,438,369 ordinary shares that the Company has issued at the date of this Explanatory Memorandum.

      If any Performance Rights granted as proposed above are exercised the effect would be to dilute the shareholding of existing shareholders.

      The highest closing price for Shares trading on ASX during the past 12 months was A$0.093 which occurred on 20 October 2014 and the lowest closing price of Shares trading on ASX during the past 12 months was A$0.030 which occurred on 25 June 2015. The most recent closing price of Shares trading on the ASX prior to the date of this Explanatory Memorandum was A$0.036 which occurred on 7 October 2015.

      The other remuneration currently being received by the proposed recipient of the Performance Rights is set out on page 34 of the 2015 Annual Report of the Company and in the Company's ASX announcement dated 25 June 2014.

      At the date of this Notice the proposed recipient of the Performance Rights, Amanda Lacaze, has an interest in 1,030,976 ordinary shares and 8,175,442 employee performance rights.

      These numbers of Performance Rights were chosen by the Company's Nomination and Remuneration Committee in order to provide the Executive Director with an appropriate mix of cash remuneration and remuneration by way of Performance Rights. An external consulting firm, Mercer, provided data relating to Total Remuneration based on company peer groups to assist the Company to benchmark the remuneration package of the previous CEO. The remuneration package of Ms Lacaze was announced to the ASX on 25 June 2014, with a base salary 30% less than the base salary of the previous CEO and a Total Remuneration equivalent to the Total Remuneration of the previous CEO (i.e. Ms Lacaze has more remuneration at risk). This data was also used by the Company's Nomination and Remuneration Committee to calculate a recommended number of Performance Rights to be granted to achieve remuneration in line with the Company's remuneration policy based on

      peer group comparison. The Performance Rights component of the remuneration provides a link to the medium term and long term strategies of growing the Company for the benefit of all shareholders.

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